August 01, 2012

People Respond to Incentives

Eight female badminton players were disqualified from Olympic competition because they were allegedly not playing hard enough.

The players from China, South Korea and Indonesia were accused of playing to lose in order to face easier opponents in future matches, drawing boos from spectators and warnings from match officials Tuesday night.

First, a racquet sport champion once told me that badminton was actually the most grueling racquet sport there is. So don't dismiss it as too wimpy to be an Olympic sport just because your knowledge of the game is that you played it at grandma's house when you were a kid.

Now, this is a problem with the rules, not the participants rational response to the rules. How do you force competitors to play their best each and every match? Institute rules that create the incentive for them to do so.

Much like flawed institutions in poor and undeveloped countries that don't create effective incentives for people to efficiently create value for others, the Badminton World Federation failed to institute rules that create the incentive for athletes to perform their best each and every match. Change the structure of competition.

What the players did was, after qualifying for the quarterfinals, tried to intentionally lose their matches in order to pair with lesser teams during the finals. It sounds like a logical and rational response to a poorly designed competition.